The US administration's financial packages worth $ 5 trillion and the Federal Reserve's ultra-loose monetary policy have positively affected employment data that has been released recently, showing that US economy continues to recover. In addition to the employment data, statements by President Joe Biden and Secretary of the Treasury Janet Yellen were also significant for the markets.

After the announcement of Covid-19 as a pandemic by the World Health Organization (WHO), developed and emerging economies started a huge effort against the pandemic. Advanced economies have advocated ultra-loose monetary policy, while public authorities have also provided financial support in record levels. Especially the US provided many financial packages supporting the economy and worth almost 5 trillion USD in total. In addition, Fed set the interest rates close to zero and supported the economy by asset purchases worth 120 billion USD.

In addition to the support provided by the US monetary and financial authorities, rising international food and commodity prices have caused inflation concerns in the region. Along with inflation concerns, US 10-year bond interest rates have exceeded the critical 1.70 band, while Fed members' arguments that inflation rates will be temporary have eased the huge impact on the long-term treasury yields.

As members of the Federal Open Market Committee (FOMC) continue to defend temporary inflation rates, President Joe Biden, who had taken the office on January 20, has started to work on an infrastructure package worth nearly 6 trillion UD. Long-term treasury yields have started to strengthen again after this package has been shared with the public and Fed members have also started to discuss a reduction in asset purchases. At the FOMC meeting of the last month, some of the members advocated reducing asset purchases, while Fed Chair Jerome Powell indicated that current policy would continue until he is confident the economy recovered.

Members, who defend the view that inflation rates will be temporary, had expected strong growth in nonfarm payrolls data in April. But the market responded negatively as the data indicated 278k, while the expectation had been 978k indeed. These rates have increased slightly in May and have been registered as 559k.
 

President Joe Biden's Views on Employment

President Biden, saying that the employment rates are very good news for the US economy, pointed out that they have created 2 million jobs since January 20. Biden said that they are doing better than other countries, there are signs of more progress in employment, and the US economy is coming out of its worst crisis in 100 years.
 

Janet Yellen on Interest Rates

President's statements, as well as the huge spending packages he is preparing, have raised concerns that they will increase inflation rates in the coming years. Then, Secretary of Treasury Yellen commented on this issue.

"If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view," she noted.

In addition, Biden's packages would increase spending by about $ 400 billion each year, Yellen said, arguing that those numbers would not be enough to push the inflation rate above target.

"We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade. And if this helps a little bit to alleviate things then that’s not a bad thing -- that’s a good thing," she further added.

Nonfarm payrolls have risen in May compared to April and have positively affected SP500, NQ100 and DOW30. After the data, long-term treasury yields fell to 1.55, putting pressure on the US dollar, the world's most important reserve currency. However, after Yellen has given a high interest rate message in her statement the previous day, the dollar headed to recover its losses on Friday, while Wall Street indices started the week bearish.